Future Retail deal: Amazon dragged to India's antitrust watchdog again

Date:
Mon, 08 Nov 2021 08:35:21 +0000

Description:
Independent directors of Future Retail have complained to the antitrust watchdog Competition Commission of India that American retail giant Amazon
had violated foreign direct investment norms when it picked up a 49% in the companys promoter entity, Future Coupons.

FULL STORY ======================================================================

The Future Retail and Amazon India spat doesn't look like ending anytime
soon. A new flank has been opened up with the independent directors of Future Retail Ltd (FRL) writing to the Competition Commission of India (CCI) requesting it to revoke the approval it had given to Amazon-Future Coupons (FCPL) deal in November 2019.

In their letter, the independent directors of the beleaguered Future Retail said that Amazon had concealed certain information when seeking approval for the deal.

"Amazon sought and obtained the approval of the commission on the basis that it was investing in the business of FCPL and not on the basis that it was acquiring strategic, material and special rights over FRL in preference to
all the shareholders of FRL," the independent directors said in the letter. SEBI nod for Reliance-Future deal - Is it a setback for Amazon? Reliance expands retail business, buys out Future Group - what it means Prior govt nod needed, say directors

In August 2019, Amazon had agreed to purchase 49% of one of Future Groups unlisted firms (Future Coupons), allowing it to buy into Future Retail after
a period of between three and 10 years. Future Coupons owns a 9.82% stake in Future Retail.

This deal allowed Amazon to not only indirectly hold a stake in Future
Retail, but also got effective veto power over the listed retail company.

Amazon is now being alleged to have misrepresented to the CCI that its rights over Future Retail were only investment protection rights."

The directors said Amazon had not disclosed its strategic interest in FRL to the CCI. This was to prevent it from referring the transaction to other governmental agencies. In that case, the agencies would have said the transaction was illegal and hence, Amazon could not have proceeded with it.

The directors have also claimed that Amazons acquisition of these strategic rights will be in violation of Indias Foreign Direct Investment Rules since any acquisition of shares by a foreign entity in a multi brand retail company would require prior government approval.

The situation has come to such a pass because Amazon and Future group are daggers drawn at each other. The messy story, so far

When the Reliance Group (Reliance Retail) sought to take over the retail business of the Future Group last year, Amazon dragged both the companies to the court here and arbitration centre in Singapore.

The case has gotten complex and convoluted as it is being fought on multiple fronts.

The three parties --- Amazon, Reliance and Future --- are putting a spirited fight with reason. For at stake is several thousands of crores of rupees and the bragging rights in the highly lucrative in Indian retail and e-retail market.

Last August, the Kishore Biyani-led Future Group worked out a Rs 24,713 crore agreement with Mukesh Ambani-helmed Reliance Retail. Future Group, which is
in financial distress, sold its retail, wholesale, logistics and warehouse businesses to Reliance Retail Ventures.

The deal is seeing problems right from day one as Amazon had bought 49% stake in one of Futures unlisted firms in 2019 in a complex deal --- this deal is the one being called into question by the independent directors.. Amazon's contention is that as part of this deal, Future could not have sold itself to Reliance, Amazon's rival in the market place.

Future is saying that Amazon had failed to provide any help to the debt-laden firm that suffered a massive setback during the Coronavirus lockdown. Amazon contends that there were ongoing discussions on multiple options with
partners and with the promoters of Future.

Last year, Indias antitrust watchdog had cleared the deal between Ambani and Biyani firms. Upcoming phone launches in India for November 2021 Want to know about the latest happenings in tech?FollowTechRadar Indiaon Twitter ,
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Link to news story: https://www.techradar.com/news/future-retail-deal-amazon-dragged-to-indias-ant itrust-watchdog-again/


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